My parents are about to retire. Advice?
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Thread: My parents are about to retire. Advice?

  1. #1
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    My parents are about to retire. Advice?

    My parents have been quite good at managing their investments, asset allocation, and now even use a discount brokerage with ETFs. But they don't really know what to do in preparation for retirement... can forum members offer any advice and first steps?

    Issues: taxes and retirement benefits (including academic pension plans), optimization about positioning investments, maybe optimization regarding timing. The academic pensions alone add up to quite a bit.

    They've dealt with many mutual fund salespeople, who I think are woefully unqualified to help then in "retirement planning". I think they need a bigger picture, somebody that can help develop a plan involving the pensions, tax efficiency, sustainable withdrawal rate, suitability of annuity for a portion of the plan, etc.

    Actual technical steps, like buying index funds and ETFs, are things they already know how to do (or I can help them with). So I'm more concerned with big picture planning like tax effects, SWR, etc.

    Thoughts? Are there people who provide this kind of advice, who aren't in the business of selling mutual funds and annuities?

    Last edited by james4beach; 2015-12-28 at 06:04 PM.

  2. #2
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by james4beach View Post
    My parents have been quite good at managing their investments, asset allocation, and now even use a discount brokerage with ETFs. But they don't really know what to do in preparation for retirement...

    ... The academic pensions alone add up to quite a bit ...

    I think they need a bigger picture, somebody that can help develop a plan involving the pensions, tax efficiency, sustainable withdrawal rate, suitability of annuity for a portion of the plan, etc.


    james4 i do believe you're looking in the right direction but i don't think you'll find too many good suggestions here. Maybe the usual "find fee-based planner" blah blah. As if they - actuary-trained financial planners - grew on trees, haha.

    the significant "academic pensions" are the signal. MoneyGal had an excellent reference, but that was a couple years ago. He was a retired actuary who'd spent his career at big insurance companies, then in retirement he clearly was enjoying the business of helping real people for a change. He struck me as not only a capable actuary but also a highly ethical professional.

    as i recall, his fee was similar to a top fee-based planner with actuarial experience. IE $3,500 - $5,000. Please do not flinch. All the good advisors charge in this ball park.

    the product would be a plan for the married couple that would set course for at least a decade or 2, possibly for the rest of their lives. You should consider here that there are 2 persons involved & although they might be married to each other, nevertheless their pension, savings & investment profiles might look quite different under actuarial analysis.

    my guess is that actuaries in private practice are scarce as hens' teeth. You could pmm moneyGal to ask for the name of this gentleman. He's in toronto but might be able to suggest someone in winnipeg. Or - working at the search from the other end - your parents might be able to locate a short list of suitable professionals in winnipeg by checking with colleagues in the Commerce/Business/Finance faculty.

    IMHO an actual membership in whatever the professional corporation of actuaries calls itself is not necessary. What is necessary is significant experience at an actuarial firm. By that i mean a few years full time employment, not a week or 2 week quickie internship as part of some fast financial planning course.

    one last thing, if i may? félicitations for having chosen such fine parents.
    ego borago gaudia semper ago

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    Senior Member heyjude's Avatar
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    James, if your parents are academics they should be capable of researching this subject. I recommend this book by Darryl Diamond:

    http://www.diamondretirement.com/mee...blueprint-book

    He runs a retirement planning firm, but only advises on assets under management.

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    Senior Member Daniel A.'s Avatar
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    An often overlooked issue for those thinking about retirement is what to do with time, I find it interesting that most only think about the financial issue.

    For the kind of advice you are asking about look up Assante Wealth Management.

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    Quote Originally Posted by james4beach View Post
    My parents have been quite good at managing their investments, asset allocation, and now even use a discount brokerage with ETFs. But they don't really know what to do in preparation for retirement... can forum members offer any advice and first steps?
    Sounds to me like they are smart enough to figure this out for themselves. Did they ask for your and our help?

    We are well into retirement, and you can be sure that I did not ask for my kids advice on how to go about it!

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    Thanks for the ideas about the fee-based planners and actuaries. But would these people know about tax implications? I would think that investment planning and tax consequences are closely linked.

    heyjude, thanks for the book recommendation!

    Sounds to me like they are smart enough to figure this out for themselves. Did they ask for your and our help?
    Yes, they did ask for my help and pointers to resources. I reached out to my connections and found them material on SWR, as well as a planner who has been recommended by an accountant friend. I consider asking on here an extension of the general request for pointers.

    I'm staying out of the decisions, other than encouraging them to minimize fees. They still have a lot of high MER mutual funds.

    Quote Originally Posted by humble_pie View Post
    one last thing, if i may? félicitations for having chosen such fine parents.
    Thanks! They are the ones who deserve the thanks of course!

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    Quote Originally Posted by Daniel A. View Post
    For the kind of advice you are asking about look up Assante Wealth Management.
    Thanks! I asked a couple friends of mine and because they're in medicine, their families all used MD Financial Management but that doesn't help us non-medicine people

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    Senior Member humble_pie's Avatar
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    Quote Originally Posted by agent99 View Post
    Did they ask for your and our help?

    We are well into retirement, and you can be sure that I did not ask for my kids advice on how to go about it!

    agent99 you're right in most cases. I'd hate to think what my kids suggestions might be. Maybe Try to Sell your Knitting? Bake Sales? or the most lucrative old age financial support idea they could possibly invent: Fix Up some kind of Business selling Wild Berry Jams & Jellies.

    but there are all kinds of families. There have been quite a few responsible adult offspring in cmf forum - often oldest sons or daughters - who've visibly been helpful to their parents, without ever being invading or pushy.

    (to james) i still think the key will be analyzing the pensions & their options. Tax planning is necessary too, as you say. We hear that some financial planners do have experience in an actuarial firm. I imagine it will take your parents some time to find the right person, which is good because they will be able to cover a great deal of the distance themselves.
    ego borago gaudia semper ago

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    Are they inclined to educate themselves and DIY (especially with you as a resource), or are they inclined to write a cheque to someone else to tell them what to do?

    In either case it would be good if they know what how much they spend now and what they spend it on; know what non-discretionary income they will need to pay bills in retirement vs their planned discretionary spending; know what their pensions will pay them (are they full or early-reduced?), their expected CPP and OAS incomes. It makes a big difference if their FI-like, annuity-like pensions and CPP readily cover their expected non-discretionary retirement costs. If their remaining assets (RRSP's, TSFA's, non-reg accounts) can provide the rest of their planned income needs based on conservative growth (2% real) and a conservative swr (3%), then they may not need to change much.
    Make sure they understand the pension/financial impact on one if the other was to die young. I'd also encourage them to think about what they'd do if their health or mobility becomes an issue in 10 or 15 years - are they prepared to 'purge' years of stuff (why wait?), sell their house and move into a retirement apartment, etc.
    Last edited by OnlyMyOpinion; 2015-12-28 at 11:25 PM.

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    By the way, part of the reason I really care about their planning is that I'm an only child. I will support them if they run out of money. So I also want to make sure they're not getting ripped off.

    All of the above are good questions. Right now my mom & dad have no idea how the pension works, so that's got to be one of the first things to figure out. I think that growing old just crept up on them. Working hard, building his/her career and being busy, and then suddenly found themselves at retirement age. They just recently realized they have pensions totalling about half their net worth and don't even know the details of the pension, what it promises, etc.

    I don't know whether they'd rather pay an expert, or learn and DIY. Currently they both have the impression that their investments at mutual fund houses (under "advisors") have performed very well over time. So they have the impression that using an advisor has worked well, but I suspect this is only due to the amazing bull market since the 1980s which has masked the enormous fees they've paid to places like Investors Group.


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